Tuesday, September 9th, 2008
Mercer County sales tax revenue climbs
By Shelley Grieshop
Purchases at local businesses have brought an increase in sales tax to Mercer Co. . .
The sagging national economy may be helping spur local sales.
Mercer County sales tax collections this year are up 5.74 percent compared with the same time period last year. Approximately $2.6 million in sales tax has been collected through purchases since January - nearly $140,000 more than last year at this time.
"I'm cautiously optimistic," said county Auditor Mark Giesige, who earlier this year conservatively estimated sales tax receipts to hit $3.6 million in 2008.
Giesige believes high gasoline prices are keeping shoppers closer to home and creating a boost in local sales. He also credits the stable commercial, retail and farming industry, as well as the recreational dollars brought in courtesy of Grand Lake.
"We have a good industrial and commercial base; the largest agricultural receipts (totaling) over $300 million; the lake and tourism - it all contributes," he said.
Although Menards opened its doors in June, he can't yet thank the home improvement store for the upswing, he said. Tax collections are funneled through the state and generally lag a few months behind, so the store's sales tax figures have not yet been recorded locally.
Other economic factors likely figure into the mix, he said. Mercer County had the lowest unemployment rate in the state for 10 of 12 months last year, Giesige said. The latest tabulations place the county's current unemployment rate at 5.4 percent - still near the lowest in Ohio. The statewide average is 7.2 percent.
Giesige said the rise in sales tax revenue already was evident in April; tax revenues were up $38,000 after the first quarter. That amount also reflects sales during the 2007 holiday season because of the lag between the time the state collects the funds and distributes them back to the county.
The total state and local sales tax rate for Mercer and Auglaize counties is 7 percent.
The county collects a 1 percent sales tax combined with the state's 5.5 percent rate; both apply to the retail sale, lease, and rental of tangible personal property as well as the sale of selected services in Ohio.
Mercer County also gathers an additional 0.5 percent sales tax to generate funds for the construction and future operation of a new jail being built along state Route 29, west of Celina. Voters in November narrowly passed the 15-year jail tax levy, which became effective in April. So far this year it has generated $346,797.
Last year, the county carried over about $2 million in sales tax revenue - a nice cushion to have in tough economic times, Giesige said. Unexpected expenses can creep up when you least expect them, he added.
A matter of trust:
Sales tax is a "trust" tax that is collected by all retailers and certain service providers when they make taxable retail sales. It is called a trust tax because the consumer has entrusted this tax to retailers and certain service providers with the understanding that it will be reported and paid to the state of Ohio in a timely manner.
The Ohio Retail Sales Tax Law of 1935 was put into place to prevent the financial collapse of the public school system in Ohio. During the Great Depression, public schools in the state were in crisis because many Ohioans failed to pay their property taxes - the funding source for most schools at that time.
Before 1935, sales taxes were rare and typically only on cigarettes and gasoline purchases. Under the new sales tax law, most items sold in stores faced taxation. The action dramatically increased school funding: in its first year it generated more than $16.8 million dollars to public schools. The remaining funds went to local governments, relief for the poor, retirement pensions, administrative fees and other areas.
- Shelley Grieshop